Clocking in at 1,118 pages, the recently passed House budget bill certainly lives up to at least one part of its name. Dubbed the One Big Beautiful Bill Act, the legislation extends some tax cuts while eliminating others. It also changes the funding for public health and nutrition assistance programs.
Whether you think the bill’s provisions are beautiful may depend on your financial situation. However, many seniors may come out ahead financially.
“For older Americans, I think it will be a net positive,” says Mark Baran, managing director of accounting firm CBIZ in the District of Columbia. He cautions that the current version of the bill isn’t likely to be the one that is signed into law, though. “Senators are on record opposing several portions of the bill.”
Based on the House-passed version, here’s what is in the One Big Beautiful Bill Act for seniors.
— Permanent tax reductions
— Higher deduction for income-eligible seniors
— Increased cap on state and local tax deduction
— Loss of the IRS Direct File program
— Elimination of energy credits
— Reduced access to Medicaid
— Future reductions to Medicare
— Less food assistance for low-income seniors
— Increased estate tax exclusion
— Expanded savings options for grandchildren
— Non-itemized deduction for donations
Permanent Tax Reductions
The bill’s centerpiece makes permanent the tax cuts enacted by the 2017 Tax Cuts and Jobs Act. Those were slated to expire at the end of this year and would have meant lower standard deductions for all taxpayers and higher tax brackets for many.
“In terms of tax impact, it’s probably a net positive for everyone,” says Mark Luscombe, a Chicago-based principal federal tax analyst for Wolters Kluwer Tax & Accounting.
That said, Luscombe thinks the impact will not be as positive for the grandchildren of today’s seniors. He notes that the bill significantly increases the federal deficit and the bond market is already responding poorly. The bill is expected to add $3.8 trillion to the federal deficit from 2026 to 2034, according to the Congressional Budget Office.
[Read: Tax Changes You Can Expect in Retirement]
Higher Deduction for Income-Eligible Seniors
While there are many provisions in the One Big Beautiful Bill Act that could affect seniors, there is only one that targets them directly. That is the inclusion of a $4,000 enhanced deduction for taxpayers age 65 and older.
To receive the full deduction, a person’s modified adjusted gross income must be less than the following:
— $75,000 for single taxpayers
— $150,000 for couples filing jointly
The enhanced deduction will be available for tax years 2025 to 2028.
While President Donald Trump had promised to exempt Social Security benefits from taxes, that would require passing a separate bill. “You can’t touch Social Security in a (budget) reconciliation package,” Baran says. “The senior bonus was intended to replace that.”
[Read: Trump Proposed Eliminating Social Security Taxes. Here’s the Bill That Could Make It Happen]
Increased Cap on State and Local Tax Deduction
While the 2017 Tax Cuts and Jobs Act contained many favorable provisions, one that negatively impacted taxpayers was a limit on the amount of state and local taxes that could be claimed on itemized deductions. The act placed a $10,000 limit on this deduction, whereas previously there was no limit.
The House-passed budget bill would increase the cap on state and local taxes, commonly called SALT, to $40,000.
“The increase in the SALT from $10,000 to $40,000 might help a lot of people and put them in a situation where they might be better off itemizing deductions,” Luscombe says.
However, this is one area in which the Senate might disagree with the House. “I do think we’ll see changes in the Senate,” Luscombe predicts.
Loss of the IRS Direct File Program
In recent years, the IRS has piloted a Direct File program that allows income-eligible taxpayers to file their tax return electronically for free without using a third-party provider. Currently, the option is available in 25 states.
The House-passed version of the One Bill Beautiful Bill Act would eliminate the Direct File program, and Luscombe thinks that could affect seniors who prepare their own tax returns.
Elimination of Energy Credits
“The other thing that could affect seniors is some of these clean energy credits are going away,” Luscombe says.
The Inflation Reduction Act of 2022 extended tax credits to those who make energy-efficient upgrades to their homes, such as installing qualifying exterior doors, windows, insulation and HVAC components. The current budget reconciliation bill would eliminate this credit after the 2025 tax year. A credit for the purchase of an electric or clean vehicle would end after the 2026 tax year.
Reduced Access to Medicaid
More than 7 million seniors are enrolled in Medicaid, the government’s health insurance program for low-income residents. That’s according to the Centers for Medicare & Medicaid Services. Seniors who use Medicaid may rely on it to pay for regular medical expenses and long-term care services.
The House-passed version of the One Big Beautiful Bill Act makes numerous changes to Medicaid, most notably requiring recipients ages 19 through 64 to work 80 hours per month unless they can show they meet the criteria for a waiver of the requirement. The bill also shifts some costs to the states.
“We definitely are concerned that the Medicaid cuts are going to force states to scale back (coverage),” says Jeff Salter, founder and CEO of Caring Senior Services, which provides non-medical home care to older Americans in 20 states.
The Congressional Budget Office estimates that the One Big Beautiful Bill Act would reduce federal Medicaid spending by $700 billion from 2026 to 2034. It also estimates that 7.6 million people could become uninsured because of policy changes to Medicaid.
That could have deadly consequences, cautions Bruce Meyer, an economist and professor of public policy at the University of Chicago.
“A reduction in Medicaid coverage for adults in the U.S. means increased mortality. It means more deaths,” he says. “It will come at a cost, and it will be substantial.”
Meyer co-authored a study that tracked the mortality of low-income adults for a 12-year period beginning in 2010. The ages of those included in the study were ages 25 to 59 during that first year. It found that an expansion of Medicaid can be linked to a 21% decline in mortality and 27,000 lives saved. Meyer adds that the cost of the Medicaid expansion was covered by the economic value of those saved lives.
[Read: How Much Could Trump’s Social Security Pick Impact Your Benefits?]
Future Reductions to Medicare
The budget reconciliation bill could also lead to future Medicare reductions, although what those might be remains to be seen.
If the bill raises deficits by $2.3 trillion over the next decade, that could trigger a $490 billion reduction in Medicare spending, the Congressional Budget Office said in response to a request from Democratic Rep. Brendan Boyle of Pennsylvania. That reduction would be required because of provisions in the Statutory Pay-As-You-Go Act of 2010.
Less Food Assistance for Low-Income People
The One Big Beautiful Bill Act is currently written to eliminate $267 billion in federal funding from the Supplemental Nutrition Assistance Program, which was previously known as food stamps. Adults ages 60 and older made up 18% of SNAP recipients in 2022, according to data from the U.S. Department of Agriculture.
In addition to reducing funding for SNAP, the budget reconciliation bill increases the work requirement age for those receiving benefits from 54 to 64. This requirement would apply to individuals without disabilities who receive benefits for more than three months.
Increase Estate Tax Exclusion
High-net-worth seniors will benefit from an increase in the estate tax exclusion. Under a provision of the House-passed budget bill, the amount excluded from estate tax will increase to $15 million in 2026 and increase by the rate of inflation for every year after.
The $15 million isn’t too far off from the amount that the exclusion would be in 2026 if the Tax Cuts and Jobs Act didn’t expire, according to Luscombe. In 2025, the exclusion is $13.99 million.
Expanded Savings Options for Grandchildren
Although not directly benefiting seniors, an expansion of 529 plans and the creation of “Trump accounts” could be used by older Americans as they consider how to distribute assets to heirs.
“These accounts may be of interest because they might be part of planning,” Baran says.
529 plans can currently be used for college and private school expenses, and withdrawals from the account are not subject to federal tax if used for qualified purchases. The One Big Beautiful Bill Act expands the list of qualified purchases.
The bill also creates a new savings option called a “Trump account” that can be opened for young children and funded by family members.
Non-Itemized Deduction for Donations
During the COVID-19 pandemic, taxpayers were briefly able to deduct some cash donations even if they didn’t itemize their deductions. The One Big Beautiful Bill Act would reinstate that above-the-line deduction at a rate of $150 for single taxpayers and $300 for couples. This could benefit charitably minded seniors.
Looking forward, the One Big Beautiful Bill Act will need to be considered by the Senate, and Baran says people should be prepared for Senators to have different priorities than the House. “It wouldn’t be surprising if they go down a different path,” he says.
That means there is still a chance for some items left out of this bill to make it into the final law. Salter, for instance, is hoping for a tax credit for family caregivers and the option to use health savings accounts to pay for long-term care costs.
Senate leaders have said that they hope to complete work on the legislation by July 4, so older Americans shouldn’t have to wait long to see what the final bill entails.
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What Trump’s Big Beautiful Bill Act Means for Seniors originally appeared on usnews.com
